No abstract

With increasing concentration of economic and commercial activities, rapid economic growth and influx of population in Indian cities, the pressure on affordable housing delivery is mounting, resulting in the proliferation of slums. For a sense of the magnitude of the problem, a snapshot view of slums in a few Indian cities has been provided in this article. Focusing on the case of Mumbai, it is estimated that at the present income distribution and institutional rates, only 5-6 per cent of households can afford a house in Mumbai. The article demonstrates that the failure of policies to adhere to basic economic principles results in massive distortions in the land and housing markets, leading to failure in resolving problems of affordable housing and slums. Thus, for cities to ameliorate affordable housing delivery whilst keeping a check on the growth of slums, it is essential that policies ensure the satisfaction of certain core economic principles-in particular, the household stock and flow principle-that are instrumental in efficient functioning of land and housing markets. The article advocates that the success of Rajiv Awas Yojana would depend upon its ability to understand the informal institutions in place, given the extant distortions in the land and housing markets.

The amount of rental housing in India has declined significantly over the years for various reasons, including the nature of the rent control laws. This paper assesses the impact of rent control for Mumbai, where it has created a shortfall in formal, affordable rental housing and contributed to distortions in the land market. The paper describes how "first-generation" rent control in Mumbai has led to deterioration of the existing rental housing stock, virtually halted the construction of new housing for rental in the city, and given rise to informal practices such as pagdi or key money. It also analyses the spatial concentration and composition of rent-controlled tenements in the city. It proposes reforms that would allow a gradual move towards rationalized rent controls, arguing that such second-generation controls will help incentivize investments in the rental sector and reduce the demand in the housing market at large, with implications for prices and affordable housing in particular.

Major cities in developing countries face infrastructure shortage and inadequate financial outlays to overcome it. One way to raise finances is by leveraging the increasing urban land values using different mechanisms. This article studies the experience of land-based financing in the metropolitan cities of Hyderabad and Mumbai in India. It assesses the performance of various mechanisms implemented by the principal urban local bodies and development authorities in these cities by examining their design, collections and utilisation of revenues from land-based financing mechanisms for infrastructure provision. It finds that although land-based financing contributes substantially to revenues of public bodies, there are issues regarding efficacy of design and legal validity that need to be addressed to make it sustainable. Further, the article finds that to a certain extent, some of the public organisations use revenues from land-based financing for capital expenditure.

No abstract